The False Promise of Making Community Colleges Tuition-Free

Making community colleges affordable for all is a worthy and achievable goal. Making them tuition free is not the way to do it.

The idea that public colleges and universities should be tuition-free has gained many believers in recent years. The impetus has been particularly strong for community colleges where many supporters now back College Promise legislation. With President Biden now proposing his own plan for tuition-free community colleges, the drumbeat only grows louder. But years and years of chronic under-investment strongly suggest that making community colleges tuition free may well be a false promise.

Community colleges were created after World War II with the expectation that they would become a low cost alternative to public four-year institutions in terms of how much they spend per student. This expectation stems from the fact that four-year institutions are more expensive to run because of various factors including smaller class sizes, better faculty and facilities, lower student/faculty ratios, and a greater commitment to research.

But the current level of disparity exceeds most of those expectations as community colleges now spend only one-third of what public four-year colleges and universities spend per full-time equivalent (FTE) student.

Tuition revenues per student net of student aid are another source of disparity as they generate four times as much revenue at public four-year institutions than at community colleges. And federal and state governments together devote ten times more per student to academic programs than to vocational programs in community colleges and other postsecondary training opportunities, including apprenticeships.

It is these large disparities that have led advocates to seek to make community college more affordable by substituting government funds for what students now pay in tuition. But in reality, eliminating tuition at community colleges may well make it harder to close the resources gap.

Why is that? Tuition accounts for one-sixth of all revenues collected by community colleges nationwide. Eliminating tuition would require $10 billion more in public funding just to keep total resources for community colleges at current levels. (Increasing these resources, which college leaders would surely argue for, would require even more additional government support.)

To put this $10 billion in context, state and local governments together currently provide about $30 billion in annual appropriations to community colleges. Foregoing tuition revenues would therefore require a one-third increase in appropriations per year over current levels. This doesn’t seem like a realistic expectation.

Enter Uncle Sam. The federal government would need to make a sustained financial commitment to replace all that lost tuition, year after year into the future. This longer-term scenario is the fundamental problem with making community colleges tuition free: it is extremely unlikely that such a federal commitment could be enacted in the current budgetary climate. And when the Biden administration is no longer in power and/or the Congressional leadership and power balance has changed, what are the chances that the additional federal funding will continue to flow?

Here lies the danger to community colleges: they would become totally dependent on government funding and would lose the ability to use tuition as a balance wheel to offset the inevitable ups and downs of such funding. Their predicament would be particularly dangerous during economic recessions, when enrollments usually increase while public funding is typically cut back.

This is why many community college leaders, when asked privately what they think about becoming tuition free, are often not so enthusiastic about the idea. That’s because they realize that such a change would endanger their ability to manage their institutions in times of economic stress, while at the same time inviting more government oversight. More than one leader termed the latter situation the classic “camel’s nose under the tent” scenario.

The fact is there are better ways to achieve the goal of making community colleges more affordable to more people. An increase in Pell Grants and other kinds of financial aid would go a long way toward accomplishing that goal for a lot less money. In fact, many College Promise proponents argue for a big increase in Pell Grants in addition to making college tuition free.

This is precisely what President Biden has now proposed. But the impact of making community colleges tuition free while expanding Pell Grants at the same time depends critically on how these changes would be implemented. Two issues in particular need to be closely examined: First, how much community colleges would be paid in lieu of the tuition they give up? The second question is how free tuition and Pell Grant would interact in aiding students and families while also providing financial support to institutions.

How Much Would be Paid to Community Colleges in Lieu of Tuition? The presumption in the current debate seems to be the federal government would pay the same amount of tuition that students currently pay. But the experience in countries around the world strongly suggests otherwise. Most likely, the government would negotiate a better deal for itself. It is also likely that the federal government would impose significant new regulations on states and institutions that accept these payments. So in the end it is not at all clear how much funds colleges would receive or how much independence they would surrender to be part of this bargain. Community college leaders should be wary of the details before getting on the bandwagon.

How Would Pell Grants and Free Tuition Provisions Interact? Most Pell Grant recipients at community colleges don’t pay any tuition already because their Pell Grant covers it, generally with some left over for living expenses. All by itself, a big increase in the Pell Grant would more than cover tuition at virtually any community colleges, leaving recipients with even more for living expenses — at least until the community colleges figured out a way to capture more of the benefit by raising tuition.

But what would happen if community colleges are made tuition-free at the same time the Pell Grant award is increased? As in so many public policy areas, the devil is in the details. It is unclear how this would work. One possibility is that the federal government would pay institutions directly to replace tuition, leaving the entire Pell Grant available to pay the recipients’ living expenses. This would be wonderful for these students, but it sharply increases the cost of the package while not improving the financial situation of the institutions. As a result, it seems unlikely to happen.

A more likely possibility is that the government would rely on the increased Pell Grant funds to pay institutions for the tuition they would have otherwise received. If this happens, much of the benefit of free tuition would accrue to middle- and upper-income students who are ineligible to receive Pell Grants because their family income is too high. This could lead to a big increase in the number of students from all income ranges flocking to community colleges, thus pushing up the cost of the tuition-replacement program.

A better idea would be to redesign Pell Grants to be a program that helps low-income students pay for their living expenses while encouraging states and institutions to make tuition affordable to all.

Any of these arrangements leaves unaddressed the key question of whether community college tuitions are reasonable and what percentage of students can currently afford them. They also don’t address how much community colleges are spending per student and whether those resources are being used well. These questions make it important to iron out the details before supporting these big ideas.

Subsequent blogs will lay out a better way to make community college affordable to students of all incomes. And it will show how this could be done without spending any more money than what the federal, state, and local governments already spend for higher education.

Art Hauptman has been a public policy consultant specializing in domestic and international higher ed finance issues for nearly a half century.

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